City council approves bill requiring more audits

Luke Broadwater and Julie Scharper, The Baltimore Sun

The Baltimore City Council gave final approval Monday to a scaled-down version of a bill to require regular audits of major city agencies, some of which have not had a detailed financial review for more than a decade.

Mayor Stephanie Rawlings-Blake said she would sign the proposed charter amendment, meaning it will go before voters on the November ballot.

The amended legislation would require financial and performance audits of 13 city agencies at least once every four years. The original bill, sponsored by Councilman Carl Stokes, called for audits of all 55 agencies every two years.

Stokes pointed out that while an audit is performed each year of the city's overall budget, more exhaustive audits of individual agencies have been far rarer. The Department of Recreation and Parks, for instance, hasn't been audited in at least 30 years, Stokes said.

Council President Bernard C. "Jack" Young cast the lone vote against the legislation, which was approved without debate.

"He was disappointed in the watered-down version that came before the council," Lester Davis, Young's spokesman, said after the meeting. "It was his belief the original bill was the way to go."

"Much of the work that is performed each year ... is the same work that would be performed in the audit of agencies," Pratt and City Auditor Robert L. McCarty wrote in a letter to the council. They argued that because the city already hires a contractor to do an annual financial audit that covers all agencies, it doesn't need a second outside firm to do more work.

"This would neither be a cost-effective nor efficient use of taxpayers' funds," they wrote.

The bill does not specify whether the audits should be done by Pratt's office or an outside firm. Pratt wanted the legislation amended to require that the work be done in-house.

She said in an interview that she feels it would be more efficient to have her office do the work, for which she would need about $2.2 million in new funding. She said she would need to hire 28 additional workers, including a manager, three supervisors and 21 auditors, among others.

At a luncheon work session, council members said constituents have told them they supported the audits bill. Some members said such legislation was long overdue.

"My constituents want this charter amendment and they want these audits," said Councilwoman Mary Pat Clarke. "We are building now a budget on sand."

Pratt said her workers have been hampered in their efforts to audit city agencies because of a lack of financial records. Auditors have been attempting to audit the books for Recreation and Parks for 21/2 years, she said, but the agency has yet to turn over the appropriate records.

Pratt, who has been comptroller since 1995, acknowledged that it has been about three decades since Recreation and Parks was audited. She blamed the agency's lack of financial records.

But she said that she supported the new legislation, in part because it would compel agencies to improve their bookkeeping practices. "If the agencies know that they're going to be audited, they will prepare themselves," she said.

Councilman James B. Kraft said a lack of records should not deter the auditors from attempting to analyze the finances of city agencies.

"That's a really sad situation if we have people running city agencies who don't have records showing how they spend money," Kraft said.

The Department of Audits has 37 auditor positions — 32 of which are filled. Pratt said the city employed 67 auditors in 1984 and 49 in 1995. While there is funding to hire an additional five auditors, Pratt said the relatively low salaries that the city offers make it hard to compete with the state and federal governments for auditors.

Currently, the auditors routinely audit only departments mandated by the city charter, such as the War Memorial Commission and the Enoch Pratt Free Library.

The city has conducted between 10 and 20 audits each of the past three years, which vary widely in size and scope. One of the highest-profile was an audit released in February that found widespread problems in city water bills.

Pratt said she has plans to conduct 33 audits next fiscal year, including of parking facilities, pension systems, water bills and the departments of finance and recreation and parks.